WASHINGTON–A federal appeals court has ruled the Consumer Financial Protection Bureau's single-director structure is constitutional, reversing an earlier federal decision.
The full D.C. Circuit Court of Appeals ruled that the CFPB’s current structure, which allows for a single director who cannot be removed by the president except for cause, "is consistent with Article II" of the Constitution. The court’s majority opinion was written by Cornelia Pillard, who was appointed by President Obama.
The majority wrote that the Supreme Court has already approved the structure of the CFPB in a 1935 case relating to the Federal Trade Commission, which also is an independent agency with a director who can't be fired at will.
The dissent in the case was written by the original three-judge panel that found in 2016 that the CFPB’s structure was unconstitutional.
The case was originally brought by PHH Mortgage Corp., which filed suit after it was fined by the CFPB.
In response to the ruling, NAFCU President and CEO Dan Berger issued a statement saying, “While the court upheld the CFPB's structure as constitutional, NAFCU still supports changing the leadership of the Bureau from a single director to a five-person commission. NAFCU was the only financial services trade association to oppose subjecting credit unions to CFPB authority under the Dodd-Frank Act, and our view on that has not changed. We will continue to push for the Bureau to exempt credit unions from current and future rulemakings."
CUNA shared a similar response.
“CUNA maintains that the best leadership structure for the CFPB is a multi-member commission, as recent leadership disputes have shown. Financial institutions and consumers need certainty at the CFPB. A leadership commission would have avoided a lot of legal wrangling and provided certainty at an agency that has major influence over the financial services marketplace,” said CUNA President and CEO Jim Nussle in a statement.
In March of 2017, NAFCU and 12 other trade associations filed an amicus brief in support of PHH's underlying challenge to the CFPB's interpretation of the Real Estate Settlement Procedures Act.
The ruling comes at the same time the leadership of the CFPB is subject to a separate lawsuit. Leandra English, the CFPB’s deputy director, filed suit after the Trump Administration appointed Mick Mulvaney to fill a vacancy created by the resignation of former director Richard Cordray. English is arguing that the language in the Dodd-Frank Act, which created the CFPB, is clear and that the deputy director should be elevated to the director position in the event of a vacancy.